The book says: marketing is not about products (their features or quality) but about perceptions (how people perceive products). Reality doesn’t exists, what we call “reality” is just a perception of reality that we create in our minds. Honda is a leading Japanese car manufacturer in US but only third in Japan (after Toyota and Nissan). If the quality of the car was the most important thing it should have the same position in all markets. In Japan, however, people perceive Honda as a manufacturer of motorcycles.
Therefore what’s important is that marketing should be focused on changing the perception.
My comment: I have mixed feelings about this law. I fully accept the premise (that perceptions is our reality). However our perception is mostly grounded in objective reality. After all if it’s raining not many people will maintain the perception that it’s wonderfully sunny day. Therefore one way of changing the perception is to change the reality (e.g. improve the quality of your cars). Maybe having the desired reality is not enough to achieve desired perception but it’s hard to argue that you can create any perception you want regardless of reality. If your car breaks down every 10 miles no amount of marketing will convince people that it has high quality.
See also Eric’s take